A Life So Fragile: Natural Disaster Japan
The news started trickling in last Friday just before 3pm EST. A magnitude 8.9 earthquake struck Japan leaving not only in its wake 50 plus aftershocks but a path of destruction, the result of a tsunami triggered from the earthquake. As the Huffington Post wrote shortly after news of the initial disaster, “Even for a country used to earthquakes, this one was of horrific proportions because of the tsunami that crashed ashore, swallowing everything in its path as it surged several miles (kilometers) inland before retreating. The apocalyptic images of surging water and uncontrolled conflagrations broadcast by Japanese TV networks resembled scenes from a Hollywood disaster movie.” In this case, pictures do tell the story more vividly than words could.
The quake that started it all struck at a depth of six miles, 80 miles off the eastern coast of Japan according to US Geological Survey. The quake, which has since been upgraded to a 9.0 was largest on record since official tracking began in the 1800’s. The impact zone was 240 miles northeast of Tokyo and left 4 million buildings in and around the countries most populous city without power. Most interesting, 7.3 magnitude earthquake hit the region just two days prior but caused no damage. Japan’s worst previous quake occurred almost 90 years ago, in 1923; that massive tremor hit Kanto and killed 143,000 people, according to US Geological Survey. As to why Japan and with such seeming frequency, the country lies on the "Ring of Fire" – an arc of earthquake and volcanic zones stretching around the Pacific where about 90 percent of the world’s quakes occur. It was this same region that produced the December 26, 2004 quake in the Indian Ocean. It too triggered a tsunami and killed a still mind numbing estimated 230,000 people across 12 nations.
Unfortunately, even though the devastation in Japan took place almost a week ago, and the news hasn’t gotten better. The death toll initially hoped to come in just over a thousand will top 10,000 as 4,000 are known dead but 8,000 plus are missing. The second part of the story is told in headlines. They read like this, “America’s Nuclear Chief Warns of Danger at Reactor 4,” “Flaws in Japan’s Leadership Deepen Sense of Crisis,” “Stocks End Lower as Traders Focus on Japan Crisis,” “The Nuclear Crisis,” and most horrific sounding of all, “Deadly For Decades.” In a scenario much like the devastation itself, i.e., scripted from a disaster movie, a major threat still looms, one with historical significance and built in uncertainty. It’s one thing if the tsunami knocks power to buildings and residents cannot take the elevator. That is an inconvenience. When it knocks out power to a nuclear reactor, that is a hazard. It is this slow deterioration of the Fukushima Daiichi complex that has citizens, investors, and the world on edge.
We can claim to know a little about many things, but nuclear physics is one such area that we cannot claim even the slightest bit of comprehension, so our account will be riddled with more inaccuracies than pixel tracking in performance based marketing. Heat, or the buildup of it, seems at the heart of the issue here. Nuclear reactors use nuclear material to make fuel. It is broken down in a reactor and the used up material also kept nearby before being transported to some Nevada like wasteland. The reactor where all this takes place is not only shielded but must be kept cool. Keeping the reactor cool does not happen without power as the breakdown of nuclear material and the used nuclear material creates heat. No power. No cooling. Lots of heat. Too much heat and things go boom and the shielding of the material goes buh-bye. That seems to be the heart of the issue here where at lest two explosions have already taken place releasing radioactive gas into the atmosphere. Too much gas traveling too far and you have the potential for sick people. How sick and how far away it might impact people is what has followers on the edge of their seat.
Our ADD society, especially our ADD industry may or may not recall that we have had several global catastrophes in the past seven years, two of the events alone accounting for a loss close to a half a million people. The most recent, Haiti also took place in a world that had YouTube, Twitter, and Facebook; whereas the Indian Ocean disaster did not. Money in some ways is at the center. Japan has the world’s third or perhaps fourth largest economy. The markets showed their concern by doing what they do well – selling.
The above graphs do not show what the markets did yesterday. Were they extended, they would show a sharp sell-off in the US markets for yesterday and again today for Japan. The Dow may be down almost 5% since Friday that doesn’t compare to the almost 17% decline in Japan’s Nikkei index. In a move that shows our macroeconomic lack of understanding, the Japanese currency is an at all time high against the US dollar. The event as a whole is one of those things that leaves us at a real loss for words. The world has thus far shown an ability to bounce back from catastrophe, and we hope the same for Japan. If anything, it gives us a chance to understand the frailty of life, the value of long-term planning, and ample opportunity for those of us get to live life as usual to reflect on our good fortune – fortune that we can work hard to influence but cannot control.
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